Madoff son asks judge to block trustee's bid to revamp lawsuit
Bernard Madoff's surviving son and the estate of another who committed suicide asked a court to block the trustee unwinding the con-man's firm from adding new claims to a lawsuit accusing them of aiding his fraud.
The trustee last month sought court permission to add fresh details to his almost five-year-old complaint, including claims that Andrew Madoff and Mark Madoff took out sham loans from the company and deleted e-mails to obstruct a 2005 U.S. Securities and Exchange Commission probe that could have exposed their father's $17.5 billion Ponzi scheme years before it unraveled.
Defense lawyers said in a filing yesterday in U.S. Bankruptcy Court in Manhattan that the trustee, Irving Picard, is seeking "another bite at the apple" after a judge overseeing a parallel case in London rejected claims that the brothers knew or should have known what their father was up to.
"The trustee was dealt a resounding defeat," defense lawyer Martin Flumenbaum said in the filing. "The bottom line is that it is simply too late for the trustee to yet again reinvent his complaint."
Amanda Remus, a spokeswoman for Picard, didn't immediately return a call seeking comment on the Madoffs' request.
In his July filing, the trustee said the brothers labeled printouts of some e-mails as "trash" before deleting them from a server during an SEC probe into Bernard Madoff's investment advisory business. The messages contained incriminating details about the brothers' awareness of the fraud, Picard said.
$17.5 Billion
Thousands of investors lost a total of $17.5 billion in principal when the fraud fell apart in December 2008, after client withdrawals exceeded what Bernard L. Madoff Investment Securities LLC could afford to pay.
Prosecutors called it the biggest Ponzi scheme in U.S. history. The brothers, who worked for the company, denied involvement and were never charged. Mark Madoff killed himself in 2010.
The Madoff liquidation is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).